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The cost of debt is influenced by the company's: Question 39Answer a. Creditworthiness and credit rating b. Earnings per share c. Total assets d. Dividend
The cost of debt is influenced by the company's: Question 39Answer a. Creditworthiness and credit rating b. Earnings per share c. Total assets d. Dividend payout ratio
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The detailed answer for the above question is provided below The cost of debt is primarily influenced by the companys a Creditworthiness and credit rating Heres why Lenders perceive higher risk for companies with lower creditworthiness and credit ratings This risk translates to a higher cost of debt for the company in the form of higher interest rates or additional fees Converselystrong creditworthiness and a high credit rating indicate lower risk and attract lenders willing to offer lower interest ratesthus reducing the cost of debt While the other options might play a role in a companys financial healththey have a less direct impact on the cost of debt Earnings per share EPS While high EPS can be seen as a positive indicator for lenders its not a direct measure of creditworthiness Companies with consistently high EPS might still have high debt levels or other risk factors that influence ...
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
